One of the entrepreneur challenges posed at the 9Others dinner on 16 July concerned bringing someone into the founding Startup team. Not sure I had many ideas on the night to now about how best to do this but it did get me thinking about teams. The theory supports this view as well. Professor Jason Greenberg from NYU Stern concludes that 65% of Startup failures are due to team issues rather than product or market failure. I have already written a couple of times about the importance of teams when making a Startup investment decision and I think this is true for the vast majority of investors. So what makes a good Startup team?
Teams need leadership. This doesn’t mean someone has to be “in charge” but for any task there needs to be direction and ambition. Leadership also means followership. Whoever is providing the direction, the others need to follow for that moment or that idea. Note one other basic fact. In a one person team there can be no leaders by definition.
Whatever the number it will be a very small group so chemistry between the individuals is essential. You can checklist the skills required but how they combine is an art not a science. A past history of working together (and not trying to kill each other!) is the only reliable indicator but may not be possible. One other thing I look out for is inclusiveness. If everyone’s ideas are not valued highly then the group probably isn’t working. It is also crazy. If you only have three people, leaving someone out is a pretty spectacular waste of resources.
Logically you might think that a passion for the business would also be a good sign of an effective team. Certainly passion is required and heart on the sleeve passion is often the most welcome sense from any Startup pitch. However, just because everyone is passionate does not mean that they can harness those passions together so be careful not to rely on just this.
Of equal importance with passion is commitment. Any great Startup is a long tough haul. A failing Startup is even harder. The core founding team needs to be on board for the duration. One tough aspect of this can be the way equity is shared in the business. There is no right answer to the value of each individual and it is very much a choice for the team. As an investor though I will look to be confident that all of the founders are motivated by their share.
Mind the gap
This is a pretty tough list and it could be much longer. One article I found in researching this piece offered 101 tips for building a Startup team! Bear in mind that in every team there will be gaps. In fact I actively look for gaps. A team with no gaps is either trying to kid me or is just kidding themselves. Deceiving yourself about weaknesses is one of the worst mistakes you can make.
There is one last thing that overrides all the others and is the one gap that can’t be covered. Action. It is easy to create a group of friends. A successful business team is much more than friends and so much harder to build. The Startup team needs to do things, not necessarily fast, not always right, sometimes not even well but there is no progress without action.
“Its hard to beat a person who never gives up.” - Babe Ruth
Kenny Fraser is the Director of Sunstone Communication and a personal investor in startups.